Divided troika grapple with Greece

More than two years after Greece embarked on its austerity cure, the country’s international lenders are increasingly at odds over what should be done with their seemingly incurable patient.

The “troika" – representatives from the European Union, the European Central Bank the International Monetary Fund – have recently returned to Athens to try to reach agreement on yet another €13.5 billion ($17.1 billion) course of budget-cutting medicine.

This would clear the way for Athens to receive its next €31 billion instalment of aid money in November, which is necessary if the country is to avoid defaulting on its debts by the end of the year.

But the troika is divided about what next to do with Athens. The IMF has become deeply pessimistic that the Greek government is capable of quickly implementing the tough economic reforms that could boost the country’s competitiveness and return it to growth.

Without growth, the country’s debt burden is simply unsustainable.

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In contrast, the Europeans are desperate to keep the near-bankrupt country afloat. They worry that a Greek exit from the euro zone could trigger a meltdown in financial markets and cause investors to start panicking about Spain and Italy.

The Europeans are also divided over whether Athens should be given an extra two years to implement the reforms it promised as part of its second €130 billion bailout.

The delay is expected to add an extra €30 billion to the cost of the bailout but Germany, the Netherlands, Finland and Austria are extremely reluctant to provide extra funding for Greece.

The IMF shares this sentiment. Instead of putting in extra money, it wants the ECB and euro zone governments to reduce Greece’s debt burden by agreeing to write down the value of their Greek bonds.

But on Thursday, ECB boss Mario Draghi said the central bank was not prepared to take any losses on its €55 billion of Greek bonds.

Faced with this impasse, European governments look likely to put off making a final decision on Greece until next month, much to the frustration of the IMF.

But while the troika despair over the bleak Greek economic outlook, Russians are snapping up Greek holiday homes, hotels, land and even football clubs.

According to Greek newspaper Kathimerini, Russians have shown interest in investing in Greece, particularly in the Thessaloniki region along with Greek islands such as Crete, Corfu and Patmos.

Russian Prosecutor General Yury Chaika, the country’s second most powerful man after Vladimir Putin, reportedly owns a villa nestling in four hectares of pine-covered hills on the Sithonia Peninsula in northern Greece.

Russian money is also behind major hotel developments in Potidaea and Psakoudia, while a Russian company is planning to build a five-star hotel in Sithonia.

Russian investors have also moved into the sporting arena and have already purchased the Thessaloniki football club of PAOK. They are also rumoured to be interested in purchasing a port in northern Greece.